SpaceX IPO Governance Concerns: New York, California Pension Leaders Urge Elon Musk To Scrap Extreme Control Structures

Leaders of three of the largest public pension systems in the United States have voiced serious concerns regarding the "extreme" ownership and control structure of SpaceX as the company prepares for its initial public offering (IPO). In a letter sent on Wednesday to founder and CEO Elon Musk, officials from New York and California urged the removal of provisions they claim would significantly curb shareholder protections. The pension leaders represent systems overseeing more than USD 1 trillion in retirement assets.

Objections to Musk’s Unprecedented Control

The letter, signed by New York State Comptroller Thomas DiNapoli, New York City Comptroller Mark Levine, and CalPERS CEO Marcie Frost, describes the proposed governance as the most management-favorable structure ever brought to U.S. public markets at this scale. Key objections include Musk’s reported voting control over stock, veto power over his own removal as CEO, and protections from litigation. Can Elon Musk Be Fired From SpaceX? Billionaire Has Sole Power To Remove Himself as CEO or Chairman, Reveals IPO Filing.

The officials also raised alarms over SpaceX's use of mandatory arbitration for shareholder claims, a move that would eliminate the standard class-action structure available to investors. Additionally, the company’s reincorporation in Texas introduces laws that require shareholders to hold up to 3% of outstanding stock—billions of dollars at current valuations—to pursue derivative litigation.

Concerns Over Corporate Conflicts and CEO Attention

Pension leaders highlighted Musk's sprawling corporate empire, noting his simultaneous leadership of Tesla, X, xAI, the Boring Company, and Neuralink. They argued that this concentration of roles puts SpaceX and Tesla in a position where they essentially compete for Musk's time and attention. The letter further questioned the lack of an independent board majority to manage potential conflicts.

Specific concerns were also raised regarding related-party transactions, such as SpaceX's all-stock acquisition of xAI and Tesla's USD 2 billion investment in SpaceX earlier this year. The officials pointed out that these deals were completed without an independent committee process or public shareholder oversight.

Market Impact and Index Inclusion

The SpaceX listing is expected to be the largest IPO in history, with the company aiming for a USD 1.75 trillion valuation and seeking to raise USD 75 billion. SpaceX has reportedly sought early inclusion in the Nasdaq 100 index, which would make it an "unavoidable holding" for the New York and California pension systems through their passive allocations. Elon Musk SpaceX Anthropic Deal: Tech Billionaire's SpaceXAI Leases 220,000 GPUs to Power Claude AI.

The pension leaders requested a meeting with Musk and his advisers to discuss these issues. They have urged the company to adopt a "one-share, one-vote" structure, install a majority-independent board, and scrap the mandatory arbitration provisions to adhere to baseline protections for long-term institutional capital.